MUMBAI: HDFC Bank, the country's second largest private sector bank, reported a 30 per cent quarterly growth in net profit as corporate and retail loans helped even as pre-tax profit from treasury halved.

The economic slowdown and the suspension of mining in many states began to reflect even in the books of HDFC Bank, which largely remains insulated as bad loans from the segment rose substantially.

But the lender led by Aditya Puri is confident of maintaining its net interest margin, a measure of its profitability.

The bank said net profit rose to Rs 1,859 crore, from Rs 1,430 crore a year earlier, in line with market expectation.

"Capex activity has been sluggish which is affecting corporate credit growth," said Paresh Sukthankar, executive director at HDFC Bank. "Commercial vehicles and equipment portfolio is seeing stress on account of slowdown in economic activity."

Banking system, dominated by the state-run banks, is under stress as economic growth slow down to a near-decade low and dampens demand for loans.But private sector lenders, such as Axis, Indus Ind and HDFC Bank, are overcoming the bad industrial climate by raising their lending to retail.

Net interest income, the difference between what the bank pays for funds and what it earns from lending, rose 22 per cent to Rs 3,799 crore on 24 per cent loan growth.

Non-interest income rose to Rs 1,799 crore from Rs 1,420 crore driven by a 24 per cent increase in fees and commissions to Rs 1,402 crore.

"The market is a bit disappointed with the lower net interest income. This could be on account of the recent base rate revision by the bank or lower-than-expected advances growth or addition in non-performing loans," said Kajal Gandhi, banking analyst from ICICI Securities.

Its net interest margin remained stable at 4.1 per cent year-on-year. However, when compared to the September quarter, the NIM has dipped to 4.1 per cent from 4.2 per cent

"We have traditionally maintained the NIMs in the range of 3.9 per cent to 4.2 per cent and we would be in that range," said Sukthankar.

The bank's gross non-performing loans has increased by Rs 411 crore to Rs 2432.21 crore in the quarter ended December 2012.

Gross non-performing assets were at 1 per cent of gross advances, and net non-performing assets at 0.2 per cent of net advances at the end of December 31, 2012.

Provisions for bad loans at the end of December quarter dipped to Rs 307.2 crore from Rs 329.2 crore in the corresponding quarter last year.